The northern emirates and Sharjah have suffered from fuel shortages in recent years due to a lack of feedstock and outdated infrastructure. In 2011, Abu Dhabi surpassed the Federal Electricity and Water Electricity Authority (Fewa) as the leading power supplier in the northern emirates. This will continue in the medium term in an effort to improve services and reduce electricity prices throughout the UAE.
“The government realises that the northern emirates cannot meet the demand, so it has pledged to export electricity,” says an industry source. “It makes sense economically and is also a way for the government to prevent discontent in the northern emirates. This has become more important after the Arab spring.”
According to data supplied by MEED’s research arm, MEED Insight, demand growth for electricity in the northern UAE is expected to average 4-5 per cent in the coming years, with imports expected to meet this demand.
In March 2011, UAE President and Ruler of Abu Dhabi, Sheikh Khalifa bin Zayed al-Nahyan, pledged to invest $1.6bn to expand the water and electricity supply in the northern emirates. As part of that pledge, Abu Dhabi Water & Electricity Authority (Adwea) was instructed to supply Fewa with 1,300MW to meet project demand.
Abu Dhabi’s pledge for further investment in the northern emirates will result in power exports to Fewa and Sharjah Electricity and Water Authority (Sewa) rising by about 80 per cent to 3,800MW between 2011 and 2013.
The northern emirates will become increasingly reliant on electricity exports from Abu Dhabi in the medium term.
Gas shortages in the northern emirates
Historically, Fewa provided all the electricity in the northern emirates through small-scale plants mainly run on a feedstock of liquid fuel. However, due to limited budgets and increasing gas shortages, Fewa has been unable to build the required infrastructure to improve and expand its power generation capacity and has had to rely on more expensive liquid fuels.
In 2007, the UAE cabinet approved the decision for Adwea to take over the responsibility for electricity generation and supply in the northern emirates. The Adwea subsidiary, Abu Dhabi Transmission & Dispatch Company (Transco) was placed in charge of Fewa’s 400kV backbone and most of the 132kV network.
Since 2007, the northern emirates’ peak power imports from Abu Dhabi have increased sharply. In 2008, imports reached 785MW, which increased to 909MW in 2009. In 2011, supplies to the northern emirates jumped to 1,198MW. As a result of Sheikh Nahyan’s pledge in 2011, peak imports are expected to more than double to 2,500MW in 2013.
The increase in exports from Abu Dhabi is expected to have a major impact on the northern emirate’s own generating facilities. By 2011, Fewa plants were meeting about 35 per cent of the northern UAE’s peak power demand, estimated to be about 1,600MW to 1,700MW.
By the end of 2013, Adwea’s power generating facilities are expected to contribute 95 per cent of total supplies, with much of the existing capacity expected to be retired.
By 2009, the last time Fewa released data on generating capacity, the federal electricity company had an estimated capacity of 1,014MW supplied by six power stations. The largest of these are the 387MW Nakheel station in Ras al-Khaimah, the 201MW Ajman plant and a 200MW Al-Zawra station, also in Ajman. Rising imports from Abu Dhabi have resulted in the shelving of Fewa’s programme to increase capacity.
Power investment in the UAE
Abu Dhabi has already invested about AED4bn ($1.1bn) in developing the power grid in the northern emirates and, in partnership with major international firms, has built two water desalination and power generation plants in Fujairah at a AED16bn total cost.
The newest of these is the Fujairah F2 plant. With the Abu Dhabi National Energy Company (Taqa) as its main stakeholder, the facility has a power generation plant with a net capacity of 2,000MW and a seawater desalination plant with a 130-million-gallon-a-day net water capacity. Operational since January 2011, the combined power and desalination plant is the second largest of its type in the world and an important source of power generation for consumers throughout the UAE.
“The Fujairah plant was a sizeable project for us, and is an important source of power for the northern emirates and Abu Dhabi,” says Mark Coxon, senior vice-president of France-based gas business, Alstom, which provided the turbines for the plant.
The inability of Fewa to meet the energy demand of the northern emirates has resulted in the launch of several new power projects in recent years. In 2007, the UAE cabinet passed a law enabling local government departments to sanction private power and water schemes in the area. However, despite a number of new projects reaching design stage, a lack of feedstock has resulted in the scrapping of most of the planned schemes.
A planned project by a joint venture of RAK Ceramics and RAK Properties to build a 130MW independent water and power project (IWPP) is one of the proposed schemes that did not reach fruition. The developers were seeking to build a diesel-fired plant, as a result of a lack of gas feedstock, but cancelled the project due to economics.
Despite the fact the vast majority of the northern emirates’ power supply is set to be delivered by Abu Dhabi, some local companies still see potential for new power-generation projects in the region. One of these is Utico Middle East, which in October signed an agreement with China’s Shanghai Electric to build the Gulf’s first clean-coal power plant.
“Over the past five to 10 years, every emirate in the UAE has been looking to commission power projects,” says Richard Menezes, managing director at Utico. “However, none of them happened because they didn’t have a wholesome plan, whether in regards to transmission or bill collection,”
Menezes says this will not be a problem for Utico’s planned project, which will rank as the world’s greenest coal-fired plant when completed. “Utico has its own transmission and distribution network, and will also have a suitable tariff and collecting system.”
Feedstock availability, particularly gas, has been a challenge for the northern emirates in recent years and has been the main reason behind Fewa’s turn towards Abu Dhabi for assistance. The planned clean-coal plant will provide welcome relief from the tightening of gas supplies for electricity generation.
“Gas has a higher intrinsic value than coal, and coal is the most abundant source. The only thing is that coal is highly polluting, but the key is how you make it green. And that is what we are doing,” says Menezes.
Increasing power capacity
Abu Dhabi will take the lead role in providing electricity generation for the northern emirates in the coming years. By the end of 2013, Adwea’s peak exports to the northern emirates will exceed the sum of the current Fewa and Sewa capacity, and will make Adwec the largest exporter of electricity within the GCC.
Abu Dhabi must also continue to increase capacity for domestic consumption, with electricity demand in the capital emirate growing an average of 10 per cent a year between 2007 and 2011. Several major IWPP, solar power and nuclear power schemes are planned over the next 20 years to meet the demand.
With Abu Dhabi now expected to provide for its neighbouring emirates while meeting growing domestic demand, it will need to ensure all planned major power schemes move forward.
By the end of 2013, Adwea’s power generating facilities are expected to contribute 95 per cent of supplies